While younger generations are often accused of not having their finances in check, a new report has revealed they may just end up in a better position than their Baby Boomer parents with strict budgets in place to ensure everything is in order.
Recently released data by the Financial Planning Association of Australia (FPA) has uncovered an emerging trend among Generation Z and Generation Y, with many claiming they want their parents to give them the gift of a financial planner to support them in managing their finances. The new Gifts That Give national research has shown an extraordinarily high number of 18 to 24-year-olds (81 per cent) and 25 to 39-year-olds (76 per cent) would like to sit down with a financial planner and help get their money in order.
Though it may come as a surprise, the data also revealed more younger adults have a better grip on where they money is coming and going than the older generations. In fact, two thirds of Gen Z (64 per cent) and Gen Y (67 per cent) are already modelling positive financial behaviour with budgets in place to manage their finances, compared to 53 per cent of Gen X and 46 per cent of Baby Boomers.
Although many parents and grandparents are nowadays handing out funds to support their offspring, the FPA has come up with another idea, with the release of a customisable gift voucher as a way for Boomer clients to consider actively investing in the financial literacy of their adult children and grandchildren. After all, the bank of mum and dad needs to come with some security.
“A financial plan is a gift that leaves a legacy,” the study explained. “It’s a gift that keeps on giving well beyond the occasion, allowing recipients to sleep well at night, knowing their finances are in order, debts are being managed and they have a path forward to achieving their money and life goals.”
Though it may seem like an odd idea, FPA Chair and practicing Financial Planner Marissa Broome said it’s a smart way of helping kids along without limiting your own funds too much. “Many parents and grandparents want to inspire the younger generation to seek advice of a professional financial planner, but are unsure how to do so,” she explained. “I’ve been offering gift vouchers in my practice for many years and it’s so rewarding to see the intergenerational ripple effect of good financial advice.”
Mother Mayanne Cummins, 56, is one of many to make use of the gift cards, giving one to her 22-year-old daughter recently for her birthday. The mum said speaking to a financial planner can be empowering for young people and make them feel more in control of where their finances are going.
“I think there’s a real need for young people to get the benefit that financial planning can offer when they’re just starting out on their journey,” she explained. “With all the talk of how hard it is for young people to buy a home now, they could really do with professional support from someone who can talk through their options. It can help them feel more in control of their future and also improve their financial literacy, empowering them to make better choices with money.”
The latest research follows claims last year from a leading properly investor who has bought and sold more than 10,000 properties since leaving school at the age of 17, that youngsters nowadays should take advantage of the bank of mum and dad to help them bag their first home.
John Fitzgerald, the author of 7 Steps to Wealth, dished out some advice for prospective home owners who are struggling to scrape together the deposit for a property during an interview on Miranda Devine’s Miranda Live podcast. The self-made property expert, who founded the JLF Group, told young people to “hit up your parents or grandparents” or find another way to get the money together in order to take their first step onto the property ladder.
Fitzgerald, who owned over $1 million in net property assets by the age of 25, told Miranda: “You’ve got to find a way. There are banks who will let you in on a five per cent deposit. If you can save up, save up. Or hit up your parents and grandparents for that stake. If you haven’t got the money, find access to it. I bought my first property in 1983 and I started with $2,500. It sounds scary but they are the hard yards you’ve got to do at the start.”
Mr Fitzgerald also claimed a joint venture between parents and their children can be beneficial to both parties, saying “team up with your parents, that helps them in retirement”. He added: “There are three million Australians who own a property unencumbered, and they should be helping their kids out and getting them started. If the kids are willing to take on that responsibility.
“The parents are the ones that are retiring broke. I have a lot of people who are kids, Millenials in their 20s earning good money and they’re actually teaming up with their parents to build a small portfolio of properties. And that’s helping their parents in retirement. We can scratch each other’s backs in that regard.”
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